ITM 309 Spring 2013 Exam One Topics Review Outline February 6 2013 Information Systems in Business Chapter 1 The Core drives of the Information Age Data raw facets that describe the characteristics of an event or object o In the info age successful managers compile analyze and comprehend massive amounts of data daily which helps then make more successful business decisions Information data converted in a meaningful and useful context Business intelligence information collected form multiple sources such as suppliers customers competitors partners and industries that analyze patters trends and relationships for strategic decision making Knowledge skills experience and expertise coupled with information and intelligence that creates a persons intellectual resources Management Information Systems MIS a business function which moves information about people products and processes across the company to facilitate decision making and problem solving To perform MIS effectively companies have an internal MIS department ex IT Apple Case and Class Discussion First mover advantage when a company can significantly increase its market share by being the first with a new competitive advantage 1 What might have happened to Apple if its top executives had not supported investments in iPods They would not be the leading company in their market and still be in bankruptcy like they were a decade ago 2 Using Porter s Five Force Model to analyze Apples buyer power and supplier power a Supplier power knows that apple is a huge company and is doing well so the suppliers have high power and will charge top dollar b Buyer power the buyers low power because apple is one of a kind and stands out heavily against competitors 3 Which of Porter s Five Forces did Apple address through its introduction of the iPhone Rivalry against existing firms because other companies were catching up to apple with other mp3 players so they needed to do something different 4 Which of the Generic Strategies is Apple following Narrow market high cost they specialize in technology and are at the top of their game so they can charge top dollar Competitive Intelligence the process f gathering information about the competitive environment to improve the company s ability to succeed Porter s Five Forces Model analyzes the competitive forces within the environment in which a company operates to assess the potential for profitabilty in an industry Purpose to combat 1 these competitive forces by identifying opportunities completive advantages and competitive intelligence 1 Buyer Power the power of customers to drive down prices o Switching costs costs that make customers reluctant to switch to another product or service o Loyalty programs reward customers based on their spending 2 Supplier Power the power of suppliers to drive up prices of materials o Use MIS to find alternative products to decrease supplier power 3 Threat of substitute products services the power of customers to purchase alternatives o High when there are many alternatives o Ex polaroid with digital photography 4 Threat of new entrants the power of competitors to enter a market o Entry barrier a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival 5 Rivalry among Existing Competitors high when the competition is fierce in a market and low when the competitors are more complacent o Product differentiation occurs when a company develops unique differences in its products or services with the intent to influence demand Porter s Three Generic Strategies Model 1 Broad Cost Leadership large market segment a Broad market low cost Walmart broad range of products at low prices a Broad market high cost Neiman Marcus broad range of differentiated 2 Broad Differentiation products at high prices differentiation 3 Focused Strategy niche or unique market with either cost leadership or a Narrow market low cost Payless specific product at a low price b Narrow market high cost Tiffany Co differentiated product at high prices Business Strategy Basics corporate strategy is all about deciding how your firm will create economic value added Drivers of firm profitability Industry structure analyze with Five Forces Model Sustainable competitive advantage analyze with Value Chain Model Business process a standardized set of activities that accomplished a specific task ex processing a customer s order Value Chain and Value Chain Analysis views a firm as a series of business processes that each add value to the product or service Groups firms activities into two categories 1 Primary value activities Inbound logistics acquires raw materials and resources and distributes to manufacturing as required Operations transforms raw materials or inputs into goods and services Outbound logistics distributes goods and services to customers Marketing and sales promotes prices and sells product to customers 2 Service provides customer support after the sale of goods and services 2 Support value activities Firm infrastructure includes the company format or departmental structures environment and systems Human resource management provides employee training hiring and compensation Technology development applies MIS to process to add value Procurement purchases inputs such as raw materials resources equipment and supplies Business Competitive Advantages Using IT Enablers Information can support many competitive strategies Build customer focused businesses Reengineer business processes Businesses become agile companies Create virtual companies outsoruce partners Build knowledge creating companies 3 Strategic Decision Making Chapter 2 A group of business activities undertaken by an organizational pursuit of a common goal Include receiving orders selling products delivering products or invoicing for services received Usually depends upon several business functions for support ex IT or personnel Process Decision Making Reasons o People need to analyze large amounts of info o Must make decisions quickly o Must apply sophisticated techniques to make good decisions o Must protect the corporate asset of organizational information security concerns with growth Decision Making Process 1 Problem Identification 2 Data Collection 3 Solution Generation 4 Solution Test 5 Solution Selection 6 Solution Implementation Operational considered to by structured decisions that arise in situations where established processes offer potential solutions affect short